How accurate is geopolitical forecasting?

Why geopolitical forecasting is so difficult, and what we should do in order to prevail within the field of geopolitical forecasting?

How accurate is geopolitical forecasting?

Long story short… many times not very accurate. In this blog text we try to understand why geopolitical forecasting is so hard, and on the other hand explain what we should do in order to prevail within the field of geopolitical forecasting.

Basics of geopolitical forecasting

Geopolitical forecasting involves for example predicting the future actions and behavior of countries and their leaders. Geopolitical forecasting or predictions, like all forms of forecasting, involves a huge degree of uncertainty. Its accuracy can vary significantly based on several factors, including the complexity of the geopolitical issue, the availability and reliability of data, the methodology used for forecasting or estimations, and the inherent unpredictability of human and political behavior.

From volatility all around the world to serious instability in the Middle East to the ongoing war between Russia and Ukraine to constantly evolving concerns about implications of the rise of China, understanding what is most likely to happen - what it means and why - is of vital interest for governments as well as for companies around the world.

Complexity and Unpredictability of Human Behavior

First of all we have to understand that the geopolitical issues as a system are highly complex and very much interdependent. They involve a myriad of actors, interests, and factors - some of which are really difficult to even identify. This complexity makes precise forecasting almost impossible and even good forecasting is very challenging. Small changes in one part of the system can have unforeseen consequences elsewhere.

Political decisions are ultimately made by humans, whose actions can be unpredictable and influenced by a wide range of factors, including personal beliefs, misinformation, and emotional responses. This unpredictability adds an inherent level of uncertainty to geopolitical forecasting. For example developments within autocratic states are often very difficult to assess and predict.

Data Limitations

The accuracy of any estimation or forecast has a lot to do with the quality and quantity of data and information available. In addition, specifically in the realm of geopolitics, some information is obviously not available through open sources, it may be classified, inaccurate, deceptive, or simply in one way or another unavailable to analysts or even technology. This obviously limits the reliability of forecasts.

On the other hand, it can also be seen that from the perspective of open sources, there is enough data and information to say the least. It is more a question of how this data is collected, how it is processed, how it is broken down and how it is analyzed.

Methodological Challenges

Different forecasting methods, from qualitative expert analysis to quantitative models, have their strengths and weaknesses. While quantitative models can process large amounts of data to identify trends and patterns, they may fail to capture the nuances of political dynamics. Conversely, expert analysis can account for these nuances but may be subject to biases and errors in judgment. It is important to understand that human thinking is always biased but the main thing is to acknowledge these errors in one’s thinking. In short, good analysis has a solid methodological foundation.

Temporal Aspect

The accuracy of geopolitical forecasts often decreases over longer time horizons. Short-term forecasts have higher accuracy due to the availability of current, relevant data and the lower likelihood of unforeseen events disrupting trends. Long-term forecasts, however, face greater challenges as they must account for a wider range of potential variables and uncertainties.

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How to prevail within the field of geopolitical forecasting?

Okay... so what do you have to take into account to get estimations about the geopolitical future more right than wrong?

From the perspective of the individual analyst, the one very important aspect is thinking, and in particular thinking about thinking. If you do not know and recognize the limitations and biases of your thinking, you are likely already inherently wrong in your own analysis. Another important psychological issue is the ability to admit mistakes and the ability to change your own views in the light of new information. For most people, this is easier said than done! Subject matter expertise is also an important aspect, as long as it is not allowed to turn against itself.

It has even been studied that psychological factors, including for example inductive reasoning, open-mindedness, some sort of capability to pattern detection and overall the tendency to look for information that goes against one’s own favored views has helped analysts make more accurate estimations.

Another important aspect is the group dynamics, the analytical methods and processes used and the overall atmosphere in which the analysis and foresight work is done. This is a subject on which many books can be and have been written. To put it simply, the analytical methods used must be of high quality, transparent and the existing atmosphere must support intellectual honesty and communication free of excess hierarchy.

And what about the role of technology? The role of technology in analyzing and estimating geopolitical events will continue to grow and develop rapidly. In simple terms, however, technology is a good servant but a bad master. For the foreseeable future, we will continue to need people to anticipate geopolitical events.

Despite the challenges, geopolitical forecasting is a must for governments, businesses, and different kinds of organizations operating in one way or another global markets or value chains. Companies affected by global supply and value chains need to understand that all of their business happens within the world determined by geopolitics and geopolitical uncertainty. Good geopolitical forecasting or estimation provides critical insights that inform decision-making processes. Business success will increasingly depend on the ability to anticipate and measure geopolitical risks, understand potential impacts from those risks but also on the ability to find opportunities where others cannot.